80 FR 15036 - Federal Employees' Retirement System; Normal Cost Percentages

OFFICE OF PERSONNEL MANAGEMENT

Federal Register Volume 80, Issue 54 (March 20, 2015)

The Office of Personnel Management (OPM) is providing notice of revised normal cost percentages for employees covered by the Federal Employees' Retirement System (FERS) Act of 1986.

[Federal Register Volume 80, Number 54 (Friday, March 20, 2015)]
[Notices]
[Pages 15036-15037]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-06411]


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OFFICE OF PERSONNEL MANAGEMENT


Federal Employees' Retirement System; Normal Cost Percentages

AGENCY: Office of Personnel Management.

ACTION: Notice.

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SUMMARY: The Office of Personnel Management (OPM) is providing notice 
of revised normal cost percentages for employees covered by the Federal 
Employees' Retirement System (FERS) Act of 1986.

DATES: The revised normal cost percentages are effective at the 
beginning of the first pay period commencing on or after October 1, 
2015. Agency appeals of the normal cost percentages must be filed no 
later than September 21, 2015.

ADDRESSES: Send or deliver agency appeals of the normal cost 
percentages and requests for actuarial assumptions and data to the 
Board of Actuaries, care of Gregory Kissel, Senior Actuary, Office of 
Planning and Policy Analysis, Office of Personnel Management, Room 
4307, 1900 E Street NW., Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Karla Yeakle, (202) 606-0299.

SUPPLEMENTARY INFORMATION: The FERS Act of 1986, Pub. L. 99-335, 
created a new retirement system intended to cover most Federal 
employees hired after 1983. Most Federal employees hired before 1984 
are under the older Civil Service Retirement System (CSRS). Section 
8423 of title 5, United States Code, as added by the FERS Act of 1986, 
provides for the payment of the Government's share of the cost of the 
retirement system under FERS. Employees' contributions are established 
by law and constitute only a portion of the cost of funding the 
retirement system; employing agencies are required to pay the remaining 
costs. The amount of funding required, known as ``normal cost,'' is the 
entry age normal cost of the provisions of FERS that relate to the 
Civil Service Retirement and Disability Fund (Fund). The normal cost 
must be computed by OPM in accordance with generally accepted actuarial 
practices and standards (using dynamic assumptions). The normal cost 
calculations depend on economic and demographic assumptions. Subpart D 
of part 841 of title 5, Code of Federal Regulations, regulates how 
normal costs are determined.
    In its meeting on June 18, 2013, the Board of Actuaries of the 
Civil Service Retirement System (the Board) recommended changes to 
certain demographic assumptions used in the actuarial valuations of 
CSRS and FERS. The most significant change applies additional projected 
mortality improvement resulting in greater assumed annuitant longevity. 
The previous assumptions reflected mortality rates improved to year 
2024; the revised projection assumes mortality rates are expected to 
improve indefinitely at an ultimate rate of 1.0 percent annually for 
employees and non-disabled annuitants. OPM has adopted the Board's 
recommendations.
    With regard to the economic assumptions described under section 
841.402 of title 5, Code of Federal Regulations, used in the actuarial 
valuations of FERS, the Board concluded that it would be appropriate to 
continue to assume a rate of investment return of 5.25 percent. In 
addition, the Board determined that the assumed inflation rate should 
remain at 3.00 percent and that the projected rate of General Schedule 
salary increases should remain at 3.25 percent. These salary increases 
are in addition to assumed within-grade increases. These assumptions 
are intended to reflect the long term expected future experience of the 
Systems.
    The demographic assumptions are determined separately for each of a 
number of special groups, in cases where separate experience data is 
available. Based on the demographic and economic assumptions described 
above, OPM has determined the normal cost percentage for each category 
of employees under section 841.403 of title 5, Code of Federal 
Regulations.
    Section 5001 of Public Law 112-96, The Middle Class Tax Relief and 
Jobs Creation Act of 2012, established provisions for FERS Revised 
Annuity Employees (FERS-RAE). The law permanently increases the 
retirement contributions by 2.30 percent of pay for these employees. 
Subsequently, Section 401 of Public Law 113-67, the Bipartisan Budget 
Act of 2013, created another class of FERS coverage, FERS-

[[Page 15037]]

Further Revised Annuity Employee (FERS-FRAE). Employees subject to 
FERS-FRAE coverage must pay even higher employee contributions than 
employees subject to FERS-RAE. Employees subject to FERS-FRAE must pay 
an increase of 1.30 percent of pay above the percentage set for FERS-
RAE. Separate normal cost percentages apply for FERS-RAE and for FERS-
FRAE.
    The Governmentwide normal cost percentages, including the employee 
contributions, are as follows:

 Normal Cost Percentages for FERS, FERS-Revised Annuity Employee (RAE), and FERS-Further Revised Annuity (FRAE)
                                                     Groups
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                                                                    FERS normal      FERS-RAE        FERS-FRAE
                              Group                                    cost         normal cost     normal cost
                                                                     (percent)       (percent)       (percent)
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Members.........................................................            22.1            15.0            15.1
Congressional employees, except members of the Capitol Police...            20.4            15.0            15.1
Congressional employees who are members of the Capitol Police...            20.4            20.9            21.0
Law enforcement officers, members of the Supreme Court Police,              31.4            32.0            32.1
 firefighters, nuclear materials couriers, customs and border
 protection officers, and employees under section 302 of the
 Central Intelligence Agency Retirement Act of 1964 for certain
 employees......................................................
Air traffic controllers.........................................            33.1            33.7            33.7
Military reserve technicians....................................            18.1            18.5            18.7
Employees under section 303 of the Central Intelligence Agency              20.3            20.9            21.0
 Retirement Act of 1964 for certain employees (when serving
 abroad)........................................................
All other regular FERS employees................................            14.5            15.0            15.1
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    Under section 841.408 of title 5, Code of Federal Regulations, 
these normal cost percentages are effective at the beginning of the 
first pay period commencing on or after October 1, 2015.
    The time limit and address for filing agency appeals under sections 
841.409 through 841.412 of title 5, Code of Federal Regulations, are 
stated in the DATES and ADDRESSES sections of this notice.

U.S. Office of Personnel Management.
Katherine Archuleta,
Director.
[FR Doc. 2015-06411 Filed 3-19-15; 8:45 am]
 BILLING CODE 6325-38-P